OXFORD, UNITED KINGDOM — (Marketwired) — 11/09/16 — Sophos Group plc (the “Group”) (LSE: SOPH), a leading provider of cloud enabled enduser and network security solutions, today issues its Interim Results for the six-months to 30 September 2016 (“H1, FY17”).

H1, FY17 like-for-like(5) billings up 15.1 percent year-on-year to $282.3 million (“YOY”) (15.6 percent reported)

New customer billings(6) up 19.9 percent YOY, driven by Unified Threat Management and Sophos Central platform (c. +150 percent YOY)

Like-for-like subscription billings increased by 19.4 percent YOY (19.7 percent reported)

Cross sell of UTM and Endpoint improved to 8.4 percent (H1, FY16: 6.4 percent)

Renewal rate, including upsell, improved to 104.1 percent (H1, FY16: 100.5 percent)

Reported revenue grew 9.7 percent YOY and 10.4 percent on a constant currency basis, driven by subscription revenue which increased 12.7 percent YOY

Deferred revenue balance increased to $511.3 million (FY16: $498.7 million) driven by strong billings growth

Cash EBITDA margin 18.2 percent (H1, FY16: 18.8 percent), reflecting further investment in R&D; the company continues to expect modest YOY margin improvement for FY17

Operating loss increased as a consequence of increased R&D investment, a higher share-based payment expense and for the period a higher deferral of revenue from a shift in the mix of billings to recurring subscription contracts

Unlevered free cash flow of $62.2 million, a significant increase YOY due to improvements in operating performance and cash management and in part aided by first/second half phasing

Significant innovation during the period, with release of new next-generation endpoint protection product, Sophos Intercept X, further extension of Sophos Central cloud-based management platform, and the industry–s first synchronized encryption product, Sophos SafeGuard

Proposed interim dividend of 1.3 US Cents per share (+86 percent YOY)

“We are pleased with our first half results which were in-line with our outlook, and especially pleased with our cash flow performance which was ahead of our outlook. We continued to outgrow the IT security market, supported by a strong demand environment in our target market, industry-leading technology, the quality and reach of our extensive partner channel, the consistency of our operational execution, and the strength of our financial model, where we benefit from high levels of recurring subscription business.

As we enter the second half of the fiscal year we expect continued strong growth, in particular as we benefit from key new product releases in next-generation endpoint and next-generation firewall, and the continued momentum of our Sophos Central cloud management platform.”

For the year-ending 31 March 2017, the Board continues to expect to deliver mid-teens percentage billings growth on a like-for-like basis whilst also delivering modest cash EBITDA margin expansion, reflecting the operational leverage in the business. Revenue growth is expected to be mid-teens. Unlevered free cash flow is expected to approximately double in FY17.

For additional information, please go to .

The Sophos Group is a leading global provider of cloud-enabled enduser and network security solutions, offering organisations end-to-end protection against known and unknown IT security threats through products that are easy to install, configure, update and maintain. For further information please visit: . The Group has over 30 years of experience in enterprise security and has built a portfolio of products that protects over 240,000 organisations and over 100 million endusers in 150 countries across a variety of industries.

Certain statements in this announcement constitute “forward-looking statements”. These forward-looking statements involve risks, uncertainties and other factors that may cause the Group–s actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements. These factors include: general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance or programmes, or the delivery of products or services under them; structural change in the security industry; relationships with customers; competition; and ability to attract personnel. You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. The Group undertakes no obligation to update or revise any forward-looking statement to reflect any change in expectations or any change in events, conditions or circumstances.

Tel: +44 (0) 1235 559 933
Kris Hagerman
Chief Executive Officer
Nick Bray
Chief Financial Officer
Derek Brown
Investor Relations

Brunswick Group
Tel: +44 (0) 20 7404 5959

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